Brexit brings Scots fintech fears over passporting

THE growth of Scotland’s burgeoning financial technology sector risks being hampered by the loss of passporting rights following the UK’s exit from the European Union (EU).

UK banks and financial institutions are currently able to offer services across the EU without having to register in each individual country.

The prospect of Brexit has led to speculation major organisations will switch thousands of jobs from London to other financial centres in the EU to retain those rights. Now there are fears the loss of passporting will indirectly affect Scottish fintech companies, which often work in partnership with banks and financial institutions.

The concern has emerged in a survey published by ScotlandIS, the trade body which represents the Scottish technology sector, in partnership with law firm Burness Paull.

Svea Misech, research and policy manager at ScotlandIS, said: “The majority of fintech companies are operating only in the UK and therefore do not rely directly on passporting. However, fintech businesses often work in partnership with banks and will therefore be indirectly affected.

“The loss of passporting would also make future expansion to other European countries more difficult for UK fintech firms.”

Callum Sinclair, partner and head of technology at Burness Paull, warned fintech firms may not find it straightforward to set up in the EU after Brexit. He said: “It is not yet clear what defines such a significant presence in detail but some may interpret this as having headquarters within the EU. Such moves will be regulatorily complex, costly and risk undermining Scotland’s strong financial services sector on which fintech companies rely.” Thursday, 2nd March, 2017